Thoughts on Referendum 52

Borrowing to upgrade schools is still worth doing.

I have spent a lot of time writing about the basic idea of fixing schools to make them more energy efficient. Not only does it save energy, it also creates jobs, improves the health of children and teachers, and reduces climate-warming emissions.

I first wrote about Washington state Representative Hans Dunshee’s bill back in 2009, labeling the idea Green Increment Financing (paying for big capital expenditures for energy upgrades using bond financing). But on Tuesday, voters soundly rejected Referendum 52, which would have turned Dunshee’s bill into law.

I’ll admit, it’s disheartening, but there were larger forces at play in the region and beyond. The defeat doesn’t change the fact that R-52 is still a really great idea. The principle of performance contracting is just as tried and true today as they were last week.

Debt perception. Debt has become a four-letter word in our region (and the country). $500 million of new debt for energy upgrades seems like a lot to stomach, but in reality, it’s only a fraction of the debt we create for other projects (about 1.5 percent of the state’s total debt).Overall debt in Washington is going down. But the fact is that nobody out there has ever seen that much money in one place, so it seems like a lot. Debt is really an investment in stuff we need to get done, like borrowing to fix a leaky roof on a house: it makes sense today and adds value to the house in the future.

When I worked on school bond measures years ago I learned the lesson that people will support debt for things they understand, like schools. However, in the current political environment we’re going to have to encourage and highlight projects that demonstrate how borrowing for upgrades is a smart move. Clean Energy Works in Portland, the Community Energy Challenge in Bellingham, and Community Power Works in Seattle all set good examples.

School Finance Reform. I wrote a long piece earlier this year about how education financing works in our region. There are lots of people working on how to make education financing better for students and for improving educational outcomes, and energy efficiency advocates need to make common cause with them. Full funding of education is a constitutional obligation in Washington State, and the cash-strapped legislature has been falling short. Fixing this problem is made worse by the terrible economy and the rejection of Initiative 1098.

But those of us who plan to continue to work on this idea will need to do more outreach to understand education finance and add our voices to those already calling for serious reform. Making the cause of the education community our own cause will build trust and encourage them to support the idea of Referendum 52 more enthusiastically.

Energy Savings to Pay the Loan. Let’s face it; energy prices are rock-bottom in our region. The payoff for investing in energy efficiency upgrades takes patience. Until energy prices go up—making upgrades more lucrative regardless of how they are financed—borrowing money is the best way to pay for the work. While the overall payoff of an upgrade is long, all that matters for schools is that the improvements cover debt service for the life of the bond or the loan.

We need to find a way to make energy financing easier to implement on a large scale for schools, commercial buildings, and the residential sector. Amending the Washington State constitution would help with this, allowing the state to get more engaged in financing, and demonstrating to the public at large that debt isn’t necessarily a bad thing.

So we need to get back to the fight. Oregon’s returning Governor John Kitzaber has made Cool Schools a priority. If Washington didn’t get this done in 2010, Oregon could lead in 2011 and Washington can follow in the future. The need for upgrades won’t go away and neither will the benefits. Persisting on this critical effort is going to continue to be important.

The defeat of Referendum 52 taught us a lot and the rest of the region can benefit. In the long-term I am convinced that as energy costs go up, the core ideas of Referendum 52—energy efficiency upgrades that pay for themselves—will only grow stronger.

Comments

Justus

November 4, 2010 at 5:26 pm

Have to say, this one surprised me. It’s such a no-brainer. I know people are freaked about debt, but everyone understands investment… Was the messaging bad? Were there some resolute foes to this that I din’t know about? It wasn’t even close…

What’s to stop schools from signing up for performance contracting with an Energy Services Company (ESCO) on their own? Are ESCO’s not interested in working with individual schools or school districts outside a state contract?I wonder if one sticking point was that the program was a grant rather than a revolving loan program. Would it have been any more popular as a real performance contract in which the local school districts payed back the state using energy savings? That way the program would have been more clearly net-zero cost to the state (aside from bond interest costs) and could have recycled the repayments into even more energy savings year after year.

My question regards the “the only 10 or so companies that are contracted to the schools” As I understand it, only these 10 or so companies will only be allowed to contract to the schools, not just everybody that owns a retrofit company?Please, correct me if I’m wrong?If it is correct, 10 companies x 30k workers, I think not!I also believe that this is on the right direction, but lacked the outreach aspects of this bill, schools already know what schools need what and where, they just cannot do this work on a timely matter, it would be a long term not short term approach, which some schools are dire need of fixin! And, the cost will be that much more, say in 5 years.Some people assumed that this would be part of the 500 million, assessment, paper work, etc. This would not be true. I agree examples are what need to be projected, a right-brained approach, as my dad always says, “seeing is believing”.That said, R-52 in the future needs to be open to all contractors who pass muster first with the school systems, then would have a chance to bid, not business as usual. Lastly, after all is said and done, and any future bill is passed, please have the fore site to add 3rd party commissioning to this bill to better understand whether or not we’re getting what we paid for!-cheers

Stay up to date on the Northwest's most important sustainability issues.

Research Areas

Founded in 1993, Sightline Institute is committed to making the Northwest a global model of sustainability, with strong communities, a green economy, and a healthy environment. We work to promote smart policy ideas and monitor the region's progress towards sustainability.